Illinois’ credit rating was downgrade by Standard & Poor’s on Wednesday, a move that came after Gov. Pat Quinn has been unable to persuade lawmakers to cut costs in the state’s debt-ridden public employee pension system.
The agency lowered the state’s credit rating from A+ to A, citing a “lack of action” on changes aimed at lowering the pension system’s unfunded liability that could hit $93 billion by next summer if nothing is done. Standard & Poor’s also gave Illinois a “negative outlook,” saying Illinois’ budget future remains uncertain.
It’s unclear what kind of impact the new rating will have on Illinois’ pocketbook, but it is likely that it will cost the state more to borrow money to finance construction projects including new schools, roads and bridges.
Only California is ranked lower than Illinois by the S&P, with a credit rating of A-. But unlike Illinois, California has been given a “positive outlook.” Illinois already has the lowest credit rating in the nation from Moody’s Investors Service, which has warned another downgrade is possible unless something is done to address the state’s growing pension liabilities.
Quinn used the downgrade to again call for lawmakers to take up pension changes, saying he will convene a meeting with legislative leaders on the topic next month after he returns from the Democratic National Convention.
The governor’s last pension push resulted in a one-day special session in Springfield, where lawmakers clocked in and clocked out without approving even minor reforms two weeks ago.
But Quinn now has a potential bargaining tool: a major gambling expansion that he vetoed earlier this week. If lawmakers want new casinos badly enough, he could strike an agreement on a gambling package in exchange for sweeping pension changes.
“We have to address the public pension reform issue,” Quinn said. “It will not go away. It's imperative that we address it... It's regrettable that our legislature did not act promptly when they had the chance, but we just have to keep pushing them.”
Quinn’s comments came after a groundbreaking ceremony on a new $104 million science building at the University of Illinois at Chicago. It’s the type of project that could get more expensive if the state’s credit woes persist.
While Illinois’ top Republicans echoed Quinn’s call for action, Wisconsin Gov. Scott Walker used the opportunity to pile on, saying the downgrade shows that “there could not be a more stark contrast between Wisconsin and Illinois.”
“Political leaders in Illinois kicked the can down the road,” Walker said. “Now, they’re realizing the consequence of their actions.”
Quinn has been at odds with his Republican counterpart to the north for much of his term, with the duo taking jabs at each other over everything from recruiting business to the outcome of football games.
On Wednesday, Quinn’s office countered that Walker shouldn’t be bragging, saying that despite having one of the healthiest pension systems in the nation, Walker has been unable to improve the job market in his state.